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Congress’s Government Accountability Office Visits city of Fort Myers For Potential New Legislation related to Foreclosures

In 2010, United States Government Accountability Office (GAO) staffers travelled from Washington, D.C. to meet with City of Fort Myers Community Development staff. In addition the team also met with leaders in Cape Coral, the courts and Lee County. The Cape Coral-Fort Myers area led the nation for the number of foreclosures for two years and moved to the number two spot a year ago, only surpassed by the greater Las Vegas, Nevada area.

The GAO was tasked with providing a report and recommendation to the Congressional Subcommittee on Economic Policy, Committee on Banking, Housing, and Urban Affairs regarding the mortgage foreclosure crisis. Specifically the GAO looked at additional mortgage servicer actions that could help reduce the frequency and impact of abandoned foreclosures.

In the report the GAO identified that entities responsible for managing home mortgage loans – called servicers – may initiate foreclosure proceedings on certain delinquent loans but then decide to not complete the process. Many of these properties are vacant. These abandoned foreclosure – or “bank walkaway” – properties can exacerbate neighborhood decline and complicate federal and local stabilization efforts.

In their recommendation to Congress, the GAO recommends that the Federal Reserve and Office of the Comptroller of the Currency (OCC) require servicers they oversee to notify borrowers and communities when foreclosures are halted and to obtain updated valuations for selected properties before initiating foreclosure.

For local communities, both of these recommendations are steps in the right direction for dealing with abandoned properties. If adopted by Congress, these actions will add additional tools that City staff may utilize in addition to the City of Fort Myers Abandoned/Vacant Property Registration Program ordinance passed by the City Council in early 2010.